September 18, 2007
Monsanto (NYSE: MON) and Dow AgroSciences LLC, a subsidiary of The Dow Chemical Company (NYSE: DOW), have reached a cross-licensing agreement aimed at launching SmartStax, the industry’s first-ever eight-gene stacked combination in corn. The agreement is expected to create a new competitive standard for stacked-trait offerings and present an expanded growth opportunity for both companies’ seed brands and traits businesses by the end of the decade.
“By bringing together the two companies that have developed and commercialized the trait technologies widely used in agriculture today, we can provide farmers an all-in-one answer to demands for comprehensive yield protection from weed and insect threats,” said Carl Casale, executive vice president of strategy and operations for Monsanto. “Farmers will have more product choices to optimize performance and protection, and that translates into a higher-yielding opportunity and a new growth proposition for their businesses and ours.”
“The combination of these trait technologies signals the start of the next generation of products with improved plant protection and yield increases for the farmer,” said Jerome Peribere, president and CEO of Dow AgroSciences. “These combinations provide tremendous value to the grower while better protecting the technology-bearing crops from insect and weed resistance.”
Multi-Gene Product Set to Expand Business Opportunities for Both Companies
Under the agreement, the companies will create a novel seed offering that combines eight different herbicide-tolerance and insect-protection genes into top-performing hybrids for the most complete control ever available. The product will include the companies’ respective above- and below-ground insect protection systems, including Dow AgroSciences’ Herculex I and Herculex RW technologies; Monsanto’s YieldGard VT Rootworm/RR2 and YieldGard VT PRO technologies; and the two established weed control systems, Roundup Ready and Liberty Link.
Casale noted that the product will represent an expanded business opportunity for Monsanto’s seed and traits business. “We believe this multi-stack will enhance the growth of our branded and licensed corn seed businesses and accelerate our penetration of the potential trait acreage opportunities,” Casale said.
Dow AgroSciences’ Peribere noted that the agreement accelerates Dow’s plans to build a leading seed and biotechnology platform. “This agreement, along with other recent activities, shows Dow’s continued commitment to the ag sector and the growth opportunities that it presents,” added Peribere.
Under the agreement:
Monsanto and Dow AgroSciences will use SmartStax as the brand to serve as the commercial trademark for sales and trait licensing.
Both parties will cross-license, under royalty-bearing agreements, their respective above- and below-ground insect protection systems as well as the two leading weed control systems. The global agreements should pave the way for the introduction of the SmartStax brand in the U.S. by the end of the decade, following regulatory approvals. In addition, the agreement is structured to operate in any country where the parties seek and obtain the necessary approvals and registrations for sale of the product.
Monsanto will represent SmartStax for both parties for joint third-party licensing. This will enable the joint licensing of SmartStax to independent seed companies through Monsanto’s Holden’s/Corn States business, so that farmers can access the product in the brands they prefer to plant on farm.
Both parties will retain the right to independently stack additional trait technologies and combinations with SmartStax.
Both parties will cross-license germplasm to their seed brands for a 10-year period under royalty-bearing agreements to create exclusive new hybrid combinations which would not otherwise exist. These brands include: Monsanto’s national corn seed brand, DEKALB, and regional seed brands sold by American Seeds, Inc.; as well as Dow AgroSciences’ Mycogen corn seed brand. These agreements are expected to enable the companies’ brands to develop new higher-yielding hybrid combinations.
Multi-Gene Product Set to Expand Performance and Protection for Farmers
SmartStax will combine eight modes-of-action in multiple traits and provide season-long yield protection in three areas:
Above-ground insect control: Combining Dow AgroSciences’ proven Herculex I technology with Monsanto’s second-generation corn-borer control trait, YieldGard VT PRO, SmartStax will provide the most comprehensive protection against corn borers as well as established and emerging insects including corn earworm, fall armyworm, western bean cutworm, and black cutworm;
Below-ground insect control: Combining Dow AgroSciences’ Herculex RW technology and Monsanto’s YieldGard VT Rootworm/RR2 technology, SmartStax will provide comprehensive protection against the corn rootworm;
Weed control: Bringing together Monsanto’s industry-standard Roundup Ready 2 system with Liberty Link herbicide tolerance, SmartStax weed control systems will combine the broadest spectrum of weed and grass control with the option of two different modes-of-action.
“SmartStax expands the insect and weed protection for farmers to help maximize their return on their investment,” said Daniel R. Kittle, Ph.D., vice president, research and development for Dow AgroSciences. “We expect growers to rapidly adopt SmartStax as their primary trait package because this combination of traits provides unmatched insect protection and the greatest weed control options available, releasing the full yield potential of their production system. In addition, broad germplasm cross-licensing should generate new high-performing hybrids never before available to the market.”
“This agreement allows us to incorporate traits which provide farmers with the most complete yield protection ever available in a single package,” says Robb Fraley, Ph.D., chief technology officer for Monsanto. “It’s a major advancement in corn trait technology that will help farmers maximize yields by getting the absolute best out of today’s high-performing germplasm.”
Dow AgroSciences and Monsanto have collaborated on initial proof of concept testing on SmartStax aimed at feasibility of trait integration and viability of enhanced performance. The results from these tests are on target and will be used to prepare regulatory submissions to support the combination of the novel insect-protection stacks. To date, every trait included in SmartStax is already either available commercially or in advanced stages of regulatory review. The companies will make regulatory submissions and anticipate SmartStax will be commercially available to U.S. farmers by the end of the decade.
In addition, the companies will work with regulatory authorities to evaluate how the multiple modes-of-action within SmartStax can offer a new comprehensive insect-protection tool and the companies will seek approval to reduce the established single trait refuge programs.
In conjunction with today’s announcement, Monsanto and The Dow Chemical Company have posted presentations to their respective Web sites, which provide an overview of SmartStax and related agreements. Interested parties can access the Monsanto presentation online at: www.monsanto.com/investors and the Dow presentation online at: www.dow.com/financial/.
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